Sigrún Davíðsdóttir's Icelog

The icy outlook of Icesave

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Talking to people in Iceland it’s save to conclude that Icesave opens fault lines in Icelandic politics: the present coalition of social democrats and the Left Green is too weak to get the Icesave agreement through parliament. If the Icesave bill will only be voted by a narrow majority it’s more likely that the president will repeat his earlier act of exercising his veto right – though some say he’s likely to use it anyway because it will increase his popularity now that he’s trough more than half of the present term, ending in 2012. The rumour goes that he’s contemplating a fifth term, which would be a record in Icelandic history; no president has sat for more than four terms or 16 years.

Presenting the new Icesave outcome Lee Buchheit pointed out that the renegotiated interest rates of 3,3%, down from 5,5%, indicated an acknowledgement on the Dutch and the UK side that the Icesave situation wasn’t the fault of only one nation. This is a brilliant way of putting it, shows an acute understanding of the Icelandic perspective – but Icesave is still a hot topic in Iceland. Not so much because it’s still making the blood of the nation boil – I really don’t sense the heat – but because the political parties are still traumatised by previous attempts to solve the matter.

Passing the budget just before Christmas the government was seriously weakened by the fact that three Left Green MPs (out of 15) abstained from voting. The government has 35 MPs, out of 63. The fact that two of the opposition parties, the Independent Party and the progressives, had representatives on the Icesave negotiation committee (and did in fact suggest Buchheit as a chairman) might seem to certify that they will vote for the agreement when the Icesave bill (on a state guarantee necessary to back the agreement) comes up in parliament. That is however by no means sure. The leaders of the two parties still won’t be drawn on how they will vote.

Consequently, it’s still unsure how Icesave fares at Althingi. After the budget drama the government is thought to be searching for additional strength among the progressives. They would most likely not be willing to lend their support except in exchange for seats in government. The problem is that the leader of the progressives, Sigmundur David Gunnlaugsson, is neither popular with voters nor politicians. The ideal for the government would be to get the progressives into government but with a different leader. That might be too much to hope and wish for. The outcome of a progressive, Left Green, Social Democrat ‘rapprochement’ is unsure.

The black polar beer in the Icesave saga is Iceland’s president. President Olafur Ragnar Grimsson has already indicated that he would be ready to send the new Icesave agreement to a referendum as he did this time last year. At the time, the government undermined his act by announcing, before the referendum, that there was/would be a better offer on the table, making the referendum a pointless exercise. However, others begged to differ, saying that the referendum was indeed an important and democratic move.

If the Icesave bill, which won’t come up in parliament until after January 17 when Althingi gathers again, will only be voted through by a narrow majority the president is thought to be much likely to veto the bill, sending it to a referendum. If there is a clear majority it will be difficult for him to justify a referendum. Also, there are those in Iceland who think that the president oversteps his authority within the constitution by vetoing law passed by parliament, virtually replacing the rule of parliament with a presidential rule that has no constitutional basis. The president would evidently beg to differ on his place within the Icelandic constitution, insisting on a much more influential role than earlier presidents did.

This time last year there was an Icesave fever in Iceland as the government rushed the Icesave bill through parliament by a narrow majority that the president then used as the justification for a veto, sending the bill to a referendum. This time, there is no fever and no rush. According to Karl Marx history repeats itself, first as tragedy, second as farce. It’s still not clear where the Icesave saga is on the Marx scale of historical repetitions.

Earlier logs on the Icesave agreement: Buchheit on Icesave; further on the deal, with the press release.

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Written by Sigrún Davídsdóttir

December 29th, 2010 at 1:55 pm

Posted in Iceland

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